Fixed rate mortgages hit 14 year high in October 2022
As recent interest rate rises begin to have an impact, we’ve seen fixed rate mortgages hit their highest level for 14 years.
The hefty rise in interest rates is not good news on top of the burgeoning cost of living crisis that’s already affecting so many. It means, in real terms, that if you’re not on a fixed term deal you’ll have already seen your mortgage payments rise significantly. And even if you are, you might be concerned that when it comes time to remortgage you’ll end up paying a lot more than you are on your current deal.
How much longer is there left on your fixed rate mortgage?
One of the mechanisms the Bank of England uses to try to help tackle inflation, is raising the interest rate. But with every base rate increase we tend to see a rise in mortgage rates too. Effectively meaning that homeowners pay more interest on their home loans.
If you took out a fixed rate mortgage deal a little while ago you’re protected in the short term and won’t have seen any difference in your monthly payments. However, for an estimated two million homeowners there may be a rate rise in the pipeline. These two million borrowers are calculated to have a current fixed rate mortgage that will end in the next twelve months. The problem with that being as the loans end they will revert to a standard variable rate of interest (SVR). This will always be higher than the fixed rate, but the difference between older fixed rate deals and the SVR based on the rapidly rising Bank of England base rate could mean a sharp increase in payments.
Of course, the other option, rather than accepting the SVR, is to switch mortgage providers or move to a new loan agreement. But that too, will likely lead to an unwelcome increase in the payments you’re making. At the beginning of December 2022, for instance, the average five-year fixed rate mortgage has an interest rate of 5.78%, that’s compared to 2.64% in December 2021 – that’s more than doubled in a year.
So, are you one of the two million? Should you wait until your fixed rate product comes to an end? Or should you start applying to remortgage now?
Review your mortgage in good time
One thing people don’t always realise, is that you can review your deal and remortgage any time up to six months before the end of your loan agreement. And the earlier you speak to your mortgage adviser, the better the advice they’ll be able to give to you. They will have the experience and access to market knowledge to help you weigh up the options. Should you wait until the end of your deal, or are there potentially cheaper deals available now, that make it worth exiting your deal early? There are some expert predictions that suggest Bank of England base rates will continue to rise well into 2023, peaking somewhere between four and five percent, which means we can expect to see further mortgage rate rises into next year too.
Reviewing your mortgage nice and early has never been more important. Contact us to ask about your remortgage. We will be able to guide you through the process, help you assess the options and find the most cost-effective deal for you.
<h3>Beat the interest rate rise
The earlier you can get in touch with us the better. This will put you in the best possible position to secure a new deal that won’t break the bank.